Global semiconductor supply chain

Under 10 % of global semiconductor production occurs in Europe, which is limited to the larger chips (of 22 nanometres and above). Only two companies in east Asia, TSMC in Taiwan and Samsung in South Korea, are capable of manufacturing leading-edge chips (at 2 to 7 nanometres), while the necessary equipment for that production is produced solely in Europe, by ASML in the Netherlands. The EU’s current 10 % share of global chip revenues has shrunk from 20 % in the 1990s. Without rapid and significant investment, the EU’s global market share could drop below 5 %, putting its industrial competitiveness and technological autonomy further at risk. ASML has warned that European chip manufacturing would thereby become ‘virtually irrelevant on a global scale’. The EU remains highly dependent on foreign suppliers. Severe disruption in the supply chain could deplete Europe’s limited chip reserves within a few weeks, which would cause production in many European industries to grind to a halt.
Most European chipmakers outsource their semiconductor fabrication to external foundries, with chip testing, assembly and packaging traditionally occurring in east Asia. Better known European chipmakers, such as NXP in the Netherlands, Infineon and Bosch Semiconductors in Germany, and STMicroelectronics in France and Italy, manufacture the larger chips for the automotive and industrial sectors, but also outsource part of their production to foreign manufacturers, like TSMC in Taiwan. While Europe depends on Asia for advanced chip manufacturing and assembly, European producers also heavily rely on American intellectual property in the form of US-owned chip design tools. European chipmakers are most competitive in the automotive sector, with a global market share of 37 %, followed by the industrial sector with a 17 % global market share.